Intel shares dropped 27% on Friday, putting the chipmaker on track for its steepest single-day decline since 1974 and leaving the stock down 53% from its June 30 record high. The selloff has erased about $400 billion in market value from that peak and reduced the value of the US government’s 433.3 million-share stake by roughly $7.8 billion since Thursday’s close.

The rout deepened after Intel disclosed that an October explosion at its Kiryat Gat factory in Israel halted production for two weeks, which will cut fourth-quarter revenue by about $300 million and reduce gross margin by 2 percentage points, with a similar revenue hit in the first quarter. Intel guided fourth-quarter revenue to $15 billion to $16 billion, missing the $17.1 billion analyst consensus, and projected adjusted earnings of $0.25 a share and an adjusted gross margin of 38%, down from 44.1% in the third quarter.

CEO Lip-Bu Tan said rising memory prices and tight enterprise IT budgets have accelerated a PC inventory correction, with Intel projecting its client revenue to fall more than 20% sequentially in the fourth quarter and industry PC unit shipments to drop 12% in 2026 and 10% in 2027. Although third-quarter data center and AI revenue jumped 78% year over year to $7.3 billion, supply constraints in Intel 3 manufacturing and shortages of advanced packaging substrates are limiting server chip output, while the foundry segment lost about $1.9 billion on $6.7 billion in revenue, with just $411 million from external customers. CFO Dave Zinsner also warned that Intel does not expect positive free cash flow in 2027 as capital expenditures rise above its $20 billion 2026 target.